Feedback to ensure greater equity among car buyers

SINGAPORE 16 May, 2013, by Woo Sian Boon — “The authorities are looking into improving the existing Certificate of Entitlement (COE) system to ensure greater equity among car buyers, said Minister for Transport Lui Tuck Yew at a visit to the Marina Coastal Expressway this morning.

Views from the public and stakeholders will be sought in consultations starting next month and a final decision made later this year.”

Car dealers’ interest is plain simple. The higher the final price of the cars sold the higher the revenue is for them. Even the car sales agents are going to pick up more commissions from the banks based on higher amount of car loans and from the insurance companies based on a much higher value of the sum insured for the cars.

Private car owners’ interest is also plain simple. The lower the final car price (if the COE price is near zero, so much) the better.

Now, what are the interests of the PAP-led government?

1.CEO has been contributing several, if not tens of billions to its coffer annually.

2.Car excise duty and etc contribute billions of dollars, if not more than the contributions from COE.

3.Corporate tax from the exceptionally profitable car dealers.

4.Blatantly push for profit-maximization on all forms of mostly GLC-owned transport companies despite these so-called public-listed companies are pure monopolies or oligopolies.

Please let me pick this simple definition for “corruption”: Improper and usually unlawful conduct intended to secure a benefit for oneself or another. Its forms include bribery, extortion and the misuse of inside information.

May I ask?

1.When the PAP-led government intends to secure benefit for itself, is that called, corruption?

2.The COE is a world-first tool (sadly, passed in a rubber-stamping Parliament) to extort more money from the car buyers. Is this corruption?

4.Minister for Transport Lui Tuck Yew is paid more than a million dollars a year. Is that bribery? I reserve my comment.

Okay! Stop the rubbish talk whether the Singapore government is the most corrupted or not. Note: Corruption does not apply to people only. It applies to any entity; both private and public entity. The government is a public entity.

You may ask me: “Singapore is so tiny with limited land space to build roads. What would you suggest?”

May I ask aspiring car-owners?

1.Would you want to buy a car with 100% cash upfront? Pros: I can assure you the car price will be very much lower, comparable to car price sold in North America, or Japan. Cons: Most of you could not afford to buy a car, based on current price level which was artificially jacked up with the slew of government policies that were implemented single-mindedly to rob and rob you in every conceivable way.

2.Would you like to buy a car with 1$ down-payment, and take a 10 years installment plan car loan? Pros: You can own a car now. Cons: You bear the burden of paying the installment over ten years after signing the contract at sky-high price for your dreamed car.

This is a viable 3-step approach to solve the car ownership problem.

Step 1: All car buyers must pay 100% cash upfront without taking any car loan. The car price will dive to less than one-third, if not a fifth of the current selling price. The successful bid price for COE could be as low as $1.

Step 2: If the number of quota is not filled (say for the last one or three month), lower the requirement to pay upfront cash from 100% to 90%. The balance 10% is in the form of car loan. More aspiring car buyers can afford it. The successful bid price for COE could be near $1.

Step 3: Repeat step 2 by lowering the requirement for cash upfront by 10% (smaller step of 5% if necessary). Please take note of this interesting point. If the successful bid price for COE ranges from $1,000 to $5,000, I assume the percentage of cash up-front payment is about right. In this case, the COE is turned into a tool that helps us (not merely the Singapore government) to monitor the right level of cash upfront payment to buy a car.

This solution definitely achieves the following.

1.The Singapore government has to drop its intention to rob the car buyers, but focus on ensuring the rate of growth in the car does not cause congestion. This is the true mission of the Transport ministry. Robbing the car buyers is definitely not a noble mission.

2.The car dealers and banks would not be able to extract bloody obscene profits at the expense of the car buyers.

Let me introduce another solution here.

Bus and taxi should not pay for the COE and possibly, import tax or excise duties. They are public transport vehicle. Since both bus and taxis serve the people, they should not be instruments that serve the government, especially, in enriching the coffer of the government. I do not mind if the number of taxis doubles at the expense of private cars. With more buses and taxis plying the road, fully-satisfied commuters would not think of buying a private car, so long the commuters feel flagging down a taxi and travelling from point A to B is no hassle, say, finding a car park lot or paying for largely expensive parking rate. Excellent public transport system certainly leads to less people thinking of owning a private car.